Cisco: New Bundled Licenses To Simplify Buying Process For Partners, Customers

Cisco Wednesday said it's readying a shift in its enterprise sales model that will see it move away from selling one-off networking products to offer instead bundled licenses for customers buying data center, WAN and network access technologies.

The move, according to Rob Lloyd, president of Development and Sales at Cisco, is meant to make the buying process simpler for both Cisco enterprise customers and partners.

"We had a bunch of products. We are going to turn those products into licenses," Lloyd said during a roundtable with journalists Wednesday. "We're going to create a data center suite so you can buy a data center suite. You will see the products begin to become much less important than a simplified view for our customers to license capabilities."

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Lloyd said Cisco is offering these licensed suites for three enterprise "domains," including the data center, Wide Area Networks (WAN) and network access. Ultimately, he said Cisco will transition to a similar licensing model for its service provider business as well.

Underpinning and included in each of these enterprise licensed suites will be Cisco's Application Policy Infrastructure Controller (APIC), a key component of the networking giant's Application Centric Infrastructure (ACI) SDN offering announced last year. Cisco in January announced a new, expanded version of APIC, called the APIC Enterprise Model, designed to apply the benefits of APIC -- such as increased network automation -- beyond just the data center and into enterprise WAN and access networks.

Out of the gate, Cisco is offering four licensing options for enterprise customers, all of which include elements of the Cisco Open Network Environment, or Cisco ONE, developer platform.

The first licensing option, Lloyd said, is called Cisco ONE Essentials, and will include the APIC, Cisco's Nexus 1000V virtual switch and access to the Cisco ONE Platform Kit (onePK) for developers. "This is going to come to every customer that buys Cisco switches, routers and data center infrastructure," Lloyd said. "It's going to be part of the offering."

The second licensing option is called Cisco ONE Foundational Elements, which includes Cisco's ACI fabric, network management tools, including Cisco Prime, along with virtual network services for layers 2 and 3 of the network.

The third option is Cisco ONE Advanced Services, which Lloyd said includes higher-level, policy-based network services, such as those provided through Cisco's new InterCloud software for moving workloads between public and private clouds.

The fourth option is called Cisco ONE Advanced Security Services, and will provide end-to-end network security and threat detection technologies, including those from Cisco's SourceFire acquisition.

NEXT: Licensing Model A Plus For Partners Too

Lloyd said Cisco will continue selling one-off enterprise networking products for customers who choose to buy that way, but will make it "much simpler and more cost-effective to buy the full suites." Cisco is going to unveil pricing details for its new enterprise licenses during the Cisco Live event in San Francisco this May.

"The direction for us is that product brands will begin to become much less important than the suite itself," Lloyd said. "Because of our [product] breadth, we significantly need to simplify our customers' ability to consume it, our channel partners' ability to understand it, and we need to leverage licensing and smart packaging to make this easier."

Lloyd said Cisco's new enterprise licensing model will make things simpler for Cisco partners.

"They need simplification, too," Lloyd said of Cisco solution providers. "I don't need as many specialists running around selling little components and, I think, for them, the same applies."

Kent MacDonald, vice president of Converged Infrastructure at solution provider and Cisco Gold Partner Long View Systems, said he welcomed Cisco's new bundled licensing program, given the complexity of navigating Cisco licensing models in the past.

"Based on the number of their technologies and their acquisitions, I think Cisco has somewhere between 50 and 60 different licensing programs currently, which is very cumbersome for the partner and, at the end of the day, typically is a frustrating experience for both the partner and occasionally the end user," MacDonald told CRN. "So, to streamline the process to be able sell site licenses, either by technology or by a [customer's] entire environment, I think is fabulous."

Lloyd said the licensing changes will likely require some tweaking to Cisco's partner profitability and incentive programs like VIP, which he said still revolve fairly heavily around partners' acquiring and selling individual Cisco boxes.

That said, Lloyd noted that many Cisco solution providers are already accustomed to selling bundled licensing models from working with other vendors and Cisco technology partners.

"Many of our partners actually specialize in licensing, many of the distributors specialize in managing licensing mechanisms and many of our VARs do that, as well, and do that already for Microsoft, VMware and others," Lloyd said. "So I think we will find logical extensions of our current model, but we do need to tweak it a little bit."

Lloyd said he is working with Bruce Klein, senior vice president of Cisco's Worldwide Partner Organization, and Edison Peres, senior vice president of Worldwide Channels, to do this, and that Cisco will dive deeper into the topic at its Global Partner Summit later this month.

PUBLISHED MARCH 6, 2014